The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n):
A) period cost.
B) direct material cost.
C) indirect material cost.
D) opportunity cost.

Question

Quizplus · Accepted Answer

The cost of lubricants used to grease a production machine is an example of an indirect material cost because it is not directly traceable to the production of a specific product but is necessary for the production process. Period cost includes expenses that are not directly related to the production process, such as rent and salaries. Direct material cost includes materials that can be directly traced to the production of a specific product. Opportunity cost refers to the cost of forgoing the next best alternative.

The Cost of Lubricants Used to Grease a Production Machine